Thursday, July 17, 2008

The growth companies of the fifties and sixties promised both more sales and higher profits indefinitely. This alone was reason to distrust them. Every experienced manager should have known that these two objectives are not normally comparable. To produce more sales almost always means to sacrifice immediate profit. To produce higher profit almost always means to sacrifice long-range sales. In almost every case, this irrational promise and the resulting refusal to make balancing decisions between growth and profitability objectives was the direct cause of the large losses and the equally large write-offs of the growth companies in the late sixties and early seventies.

There are few things that distinguish competent from incompetent management quite as sharply as performance in balancing objectives. These is no formula for doing the job. Every business requires it's own balance - and it may require a different balance at different times. Balancing is not a mechanical job. It is a risk-taking decision.- Peter Drucker, Management Tasks, Responsibilities, Practices

Sure, there's a place for exhorting, for motivation and leadership - just like in parenting. But any parent with anyone more than a three-year-old knows that imploring and exhorting fail. Eventually, you have to create and enforce tough consequences.

Likewise in management, a manager has to make tough choices. Sometimes, sadly, the tough choice is "pretend the everything is fine, and when it goes south, blame the techical people to save my job" - and you can't blame the manager. He's just doing what the system is incenting him to do.

Yet in a sane workspace, what matters is results, and the manager is going to assemble and direct the troops to reach the objective. How high he sets each objective, is a key decision leading to overall success or failure - a risk management decision.